This column was co-written by Frank Chaparro, Special Projects Director at The Block, and Laura Vidiella of MNNC Group. The views expressed in this column are their own and do not necessarily reflect those of their employers.
Today (Thursday) was an interesting day for token prices. We often highlight three major factors that will drive cryptocurrency prices in 2024: political and regulatory uncertainty, macroeconomic trends, and market trends. Today, macroeconomic trends took center stage, driving the market higher early in the session and then lower again towards the end of the day.
Bitcoin Bitcoin
-3.90%
It largely reflected global stocks and other risk assets, which initially rose but closed lower. The market had to digest economic data that could influence the timing and size of future Federal Reserve rate cuts. According to the Labor Department, August payrolls were lower than expected, and unemployment claims fell last week. Private-sector jobs added just 99,000 in August, the smallest gain since January 2021.
But tomorrow could be a big day, as the Labor Department is due to release its jobs report, which could have a big impact on Federal Reserve policy. The market has been expecting a rate cut, which would provide a tailwind for riskier assets like Bitcoin. But if the labor market weakens too much rather than stabilizing, the Fed’s plans could be derailed and the likelihood of significant cuts that many are hoping for could diminish.
Even if tomorrow’s data is “just right,” Bitcoin and crypto as a whole are facing a major problem. Spot ETF flows. They’ve been brutal lately. I checked The Block’s data dashboard, and it’s not looking good. There have been outflows since August 27th. On Tuesday, $287 million was out of spot Bitcoin ETFs, and the next day, $46 million was out. So get ready for tomorrow. If there’s bad macro data and a sustained downtrend, you can expect a significant price drop.
Who can we ask the developers to do something about this issue?
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